Introduction: A Belated Liquidity Feast

On April 12, 2025, the liquid staking protocol Lido posted a tweet on platform X saying “Incentives: Soon™,” officially announcing a three-month Unichain Liquidity Incentive Program. This initiative covers 12 major asset pools, including wstETH/ETH, WBTC, stablecoins, and UNI/COMP pairs. It marks the first time in five years—since Uniswap V2’s initial liquidity mining launch in 2020—that the UNI token has been included in an official incentive program.

Previously, UNI had dropped from $19 over a prolonged three-month downtrend to as low as $4.5, nearing its historical bottom of $3.3 during the post-2022 LUNA collapse.

This move reflects both Lido’s continued dominance in Ethereum staking and Uniswap’s strategic breakthrough on Layer 2. It also serves as a key signal for identifying a possible inflection point in the broader DeFi market cycle.

Lido’s “Liquidity Fortress”: From Staking Monopoly to Cross-Chain Expansion

1.1 Lido’s Strategic Intent: Strengthening stETH’s Role as a DeFi Currency

As the dominant player in Ethereum staking with a 27.1% market share (as of April 14, 2025, source: Dune Analytics), Lido has shifted its core focus from simply expanding staking volume to enhancing on-chain utility for stETH.

Previously, stETH’s primary use cases were concentrated in lending collateral (AAVE and MakerDAO accounted for 40%) and passive holding (55%), with only 3% serving as a medium of exchange. By selecting Unichain as the main battleground for its incentive campaign, Lido aims to embed stETH into Layer 2’s core liquidity pools—positioning it as a “universal gas asset” for cross-chain transactions.

Key Technical Innovations:

• Merkl reward distribution: Uses off-chain computation and on-chain verification with zero gas fees to lower user participation barriers;
• Multi-asset pool design: Covers ETH, LSTs, WBTC, stablecoins, and UNI/COMP, forming a cross-chain asset exchange matrix;

Gauntlet collaboration: Dynamically adjusts incentive weights to prevent “short-term farming traps.”

1.2 Data Insights: Lido’s “Centralization Anxiety” and Its Breakthrough Attempt

Despite growing its validator set to 37 (targeting 58), Lido’s protocol-level market share remains at 78%—far above the 15% safety threshold suggested by Vitalik Buterin.

By guiding liquidity through Unichain, Lido is effectively dispersing risk via “inter-protocol collaboration,” migrating stETH liquidity reliance away from the Ethereum mainnet to the Rollup ecosystem—thus reducing the impact of single points of failure on staking security.

On-chain data supports this strategy: in Q1 2025, the volume of stETH bridged to Arbitrum and Optimism grew 320% year-over-year, indicating strong early traction.

Uniswap’s “Self-Redemption”: Can Unichain Reverse Its Layer 2 Dilemma?

2.1 Unichain’s Mission: From Fragmented Liquidity to Aggregation

Launched in 2024, Uniswap’s Unichain is a general-purpose Rollup built on the OP Stack, aimed at solving liquidity fragmentation across multiple chains. However, its early performance fell short of expectations:

Cross-chain experience bottlenecks: Users must bridge assets to Unichain first, increasing latency and transaction costs;

Stagnant TVL growth: As of April 2025, Unichain’s total value locked (TVL) stands at just $7.65 million—far behind competing chains.

Significance of Lido’s Incentives:

By introducing core trading pairs like stETH/ETH, Unichain can leverage Lido’s staking volume to quickly establish deep liquidity.

For instance, the initial APR for the wstETH/ETH pool is set between 180%–250%, significantly higher than similar pools on the Ethereum mainnet (typically 45%), potentially drawing in cross-chain arbitrage capital.

2.2 UNI Tokenomics: “Landmines and Light at the End of the Tunnel”

The key challenges behind UNI’s price slump include:

• Unlocking pressure: Over 65 million UNI tokens were unlocked in 2024 for the team and investors, amounting to 6.5% of the circulating supply;
• Governance deadlock: In March 2025, yet another proposal to activate the “fee switch” was rejected, preventing protocol revenue from benefiting token holders.

Signs of a Bottoming Market:

• Exchange balances at all-time highs: According to Glassnode, UNI held on exchanges has hit record levels—any reversal signal here could suggest an imminent recovery;
• On-chain token distribution: Whale addresses holding over 10,000 UNI dropped from 62% in 2024 to 47%, suggesting retail investors are entering at the bottom;
• Valuation anchor: UNI’s current price-to-sales (P/S) ratio is 8.2, below the industry average of 15.4—placing it in the lowest 10th percentile historically;
• Technical support: Weekly RSI (14) has fallen to 28.6, approaching extreme oversold levels last seen in 2022.

Market Impact: A “Song of Ice and Fire” in the DeFi Ecosystem

3.1 The “Siphon Effect” of Liquidity Migration

Lido’s incentive program could trigger two major ripple effects:

• Layer 2 Liquidity Redistribution: Stablecoin pool TVL (Total Value Locked) on emerging chains like Solana and Sui may drop by 15%–20% as capital shifts toward Unichain.
• Interest Rate War Among Lending Protocols: AAVE’s borrowing interest rate for wstETH collateral has already dropped from 5.2% to 3.8%, potentially forcing it to introduce subsidy plans to remain competitive.

3.2 COMP’s “Unexpected Rise” and Associated Risks

The inclusion of COMP in the incentive pool has sparked debate. The underlying logic may involve:

• Liquidation Cushion: Compound’s on-chain liquidation thresholds are generally lower than Aave’s, making it a more favorable choice as collateral in highly volatile markets.
• Governance Token Reuse: A recent MakerDAO proposal permits COMP to be used as collateral for minting DAI, enhancing its utility within the DeFi ecosystem.

Conclusion: Seeking “Asymmetry” Amid Uncertainty

Lido’s liquidity incentives are not just tactical collaborations between DeFi protocols—they represent a strategic experiment in value capture logic during the Layer 2 era.

For UNI, the current price of $5.40 reflects both a pessimistic valuation shaped by its historical inertia, and an embedded option premium on the success of Unichain’s breakout.

With macroeconomic shifts and emerging regulatory frameworks acting as dual catalysts, 2025 could be a pivotal year in UNI’s transition from a “governance token” to a “cash-flow-generating asset.”

Investors should be wary of short-term volatility caused by liquidity siphoning, but more importantly, should focus on the long-term value of leading protocols rebuilding their moats through the narrative of cross-chain interoperability.

Disclaimer:

1. This article is reprinted from [MarsBit]. The copyright belongs to the original author [Lawrence]. If you have any objections to the reprint, please contact the Gate Learn team. The team will handle it as soon as possible according to relevant procedures.

2. Disclaimer: The views and opinions expressed in this article represent only the author’s personal views and do not constitute any investment advice.

3. Other language versions of the article are translated by the Gate Learn team. The translated article may not be copied, distributed or plagiarized without mentioning Gate.io.